TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
SUBJECT:Title
Conduct Public Hearing Regarding the Adoption/Approval of Fiscal Year 2016-2017/2017-2018 Operating Budget (Finance Director Moe).
CONDUCT PUBLIC HEARING, ADOPT RESOLUTION NO. 16-0035
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council: a) conduct a public hearing; and b) adopt Resolution No. 16-0035 which adopts the Fiscal Year 2016-2017 Operating Budget and approves the second year of the two year budget (FY 2017-2018). Additionally, the Resolution adjusts Management/Confidential salary ranges by 2.23% and authorizes the City Manager to adjust Management/Confidential salaries within a 2.23% merit pool for Fiscal year 2016-2017. It also approves moving the Environmental Program Manager from salary schedule MC3 to MC4 (this has no budgetary impact as explained below)
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FISCAL IMPLICATIONS:
This budget is a biennial spending plan covering fiscal years 2016-2017 and 2017-2018. With the passage of Resolution No. 16-0035, Council will be adopting the FY 2016-2017 budget and approving the FY 2017-2018 budget. The FY 2017-2018 budget will be adopted one year from now in order to go into effect July 1, 2017.
The Fiscal Year (FY) 2016-2017 budget, including all funds, estimates revenues of $113,843,415 and expenditures of $114,653,747. Within those figures, the General Fund has revenues of $67,822,465 and expenditures of $67,709,224, resulting in a surplus of $113,241. The estimated fund balance at June 30, 2017 is $16,300,195 and includes $13,450,198 in financial policy reserves and $1,864,168 in Economic Uncertainty Reserves. These figures incorporate all City Council-directed changes identified through the budget study sessions, as well as staff-recommended changes and corrections to the budget. All modifications to the Proposed Budget are listed as Exhibit “A” to Resolution 16-0035 (Attachment #1).
The Fiscal Year (FY) 2017-2018 budget, including all funds, estimates revenues of $121,704,084 and expenditures of $133,291,941. Within those figures, the General Fund has revenues of $70,233,976 and expenditures of $69,900,001, resulting in an anticipated surplus of $333,975. The estimated fund balance at June 30, 2018 is $16,380,518 and includes $13,921,421 in financial policy reserves and $1,929,863 in Economic Uncertainty Reserves. These figures incorporate all City Council-directed changes identified through the budget study sessions, as well as staff-recommended changes and corrections to the budget. Those modifications to the Proposed Budget are also listed as Exhibit “A” to Resolution 16-0035 (Attachment #1).
BACKGROUND:
The Proposed Budget for fiscal years 2016-2017 and 2017-2018 is available on the City’s website at: www.citymb.info/ProposedFY17BiennialBudget <http://www.citymb.info/ProposedFY17BiennialBudget>.
Budget presentations and other documents are also available on the City’s website at:
www.citymb.info/city-services/finance/budget-and-accounting/2016-2018-budget-development <http://www.citymb.info/city-services/finance/budget-and-accounting/2016-2018-budget-development>.
The City Council gave direction to staff on the Proposed Biennial budget at its June 9th meeting. Those changes are discussed below and are documented in Resolution #16-0035.
DISCUSSION:
In order to adopt the FY 2016-2017 budget, and approve the second year of the spending plan (FY 2017-2018), there are several changes to the Proposed Budget, listed on Exhibit “A” to Attachment #1 (Resolution No. 16-0035).
The City Council direction was to modify the Proposed Budget as follows:
1. Include the following new positions (FY 2016/17)
a. Two Police Officers
b. One Administrative Clerk for Police Department (Community Affairs)
c. One Recreation Department Older Adults Coordinator
d. One Development Services Coordinator (classified as a Senior Permits Technician) in Community Development
e. Upgrade the Management Fellow to Management Analyst in the Management Services Department.
2. Remove Assistant Finance Director in FY 2017-2018 and return at FY 2016-2017 mid-year budget report for consideration in FY 2017-18.
3. Include $500,000 in both years to fund a Pension Stabilization Trust Fund.
4. Transfer $500,000 from the General Fund to the Capital Improvement Fund both years, with those funds being designated to deferred maintenance only and not new capital projects.
5. Any General Fund surplus moneys (revenues in excess of expenditures) generated in each year will be sequestered and allocated at year end by the City Council in a manner to be determined.
In addition to this City Council direction, there are a few staff-requested minor modifications needed. These include:
1. Beach Cities Transit Funding: The City participates in a cost sharing agreement with the Cities of Redondo Beach, Hermosa Beach and El Segundo to mutually fund the operating costs incurred by Beach Cities Transit Line 109. The cost sharing allocations are based on the percentage of average route miles within each jurisdiction. While Manhattan Beach’s route mileage remains consistent with the previous year, there has been a slight increase in the City’s annual contribution as a result of an increase in fuel expenses and the annual operating expenses for the transit contractor. This minor increase will require an additional allocation of $1,345 for FY 2016-17 and $3,030 for FY 2017-18. Because Proposition A has no fund balance, an additional Measure R transfer is required for this amount.
2. Tennis Court Resurfacing: a $10,500 addition to the Public Works budget for tennis court resurfacing is recommended. This amount was originally budgeted in FY 2015-2016, but due to the need to reject bids late in the current fiscal year (an event unknown at the time of budget preparation), the funds need to be re-budgeted in FY 2016-2017 in order to pay for the needed work in the new year.
Along with the aforementioned Council-directed changes, City Council confirmed that compensation adjustments for the management/confidential group of employees included in the budget (2.23%) are authorized with the adoption of the budget resolution. Additionally, Resolution No. 16-0035 adjusts the management/confidential salary ranges by 2.23% consistent with the range adjustments for Teamsters in FY 16-17.
Other personnel related clean-up items that are already included in the Proposed Budget, and are incorporated in the budget resolution where applicable, include:
1. Environmental Program Manager (Public Works) salary range adjustment (no fiscal implication):
The department transitioned certain environmental related job duties to the Environmental Programs Manager position. The expansion of job duties included waste management, and assisting with water conservation and storm water management. Due to the enhanced responsibilities for the Environmental Program Manager position, the salary grade will move from MC3 range (currently $6,985-$9,059 per month) to MC4 range (currently $8,295-$10,805/month) in Fiscal Year 2016-2017. There is no fiscal impact as the incumbent’s current salary range is already within the MC4 range; no additional funds are needed to budget for the salary range change.
2. Parks and Recreation Reorganization:
The department evaluated positions and focused on areas that will allow the department to better serve the community while making the department more efficient. The reorganization includes reallocating the funds for a vacant full-time manager position to a lower level supervisory position and reclassifying three (3) full-time clerical positions to positions with higher levels of responsibility. The changes, outlined in the budget on page 87, include reclassification of a Recreation Manager to Coordinator; Administrative Clerk II to Supervisor; Executive Secretary to Management Analyst; and Administrative Clerk II to Secretary. The overall fiscal impact is a cost savings of $16,000 which is included in the FY 2016-2017 budget.
CONCLUSION:
Staff recommends that the City Council: a) conduct a public hearing; and b) adopt Resolution No. 16-0035 which adopts the Fiscal Year 2016-2017 Operating Budget and approves the second year of the two year budget (FY 2017-2018). Additionally, the Resolution adjusts Management/Confidential salary ranges by 2.23% and authorizes the City Manager to adjust Management/Confidential salaries within a 2.23% merit pool for Fiscal year 2016-2017. It also approves moving the Environmental Program Manager from salary schedule MC3 to MC4 (this has no budgetary impact as explained below)
Attachment:
1. Resolution No. 16-0035 (including Exhibit “A” which lists all changes to the Proposed Budget)